Spring Dells Vs Commissioner of Central Goods & Service Tax (CESTAT Delhi)
Conclusion: Assessee was entitled to the area-based exemption for the reason that it was admittedly the successor of the previous unit entitled to the exemption and all the units/sheds were located in one private industrial complex which could be said to be adjacent to each other.
Held: Assessee was a partnership firm having their factory at Roorkee falling in the State of Uttarakhand. A private industrial campus was developed by the Partners of the assessee’s firm and their relatives in Khasra Nos. 114, 115, 118 and 119 of Village Raipur. The industrial complex had been developed by laying in a private road/ lane, construction of boundary wall, construction of different sheds in the campus, so that industrial units could produce goods and avail exemption under the ‘Area based exemption’ Notification No. 50/2003-CE which was available for a period of ten years to the units, which had commenced its commercial production (initially), or had undertaken expansion during 10.06.2003 to 31.03.2010. Assessee expanded its commercial production by way of installing additional plant and machinery in the shed at Khasra No. 115 and being eligible in view of circulars dated 17.02.2012 read with 04.2013, exemption was claimed for the expanded capacity also. Further, Plot ‘B’ of Khasra No. 119 was used for storage of raw material and finished goods. Revenue contended that assessee was wrongly availing Area based exemption with respect to goods manufactured at Khasra No.115 and being claimed as adjacent plot/ shed, as the said plot – Khasra No. 115 could not be termed as adjacent to Plot-F/119, since there was a common road/ open space and other factory premises / manufacturing unit established in between the existing manufacturing units at Plot-F Khara No. 119, could not be made available or applicable to the manufacturing – expanded capacity at Plot No. 115, as the same was not adjacent. In the course of inspection by the officers and physical verification of all the three sheds / manufacturing premises of assessee and the adjoining area, it was observed that the manufacturing unit in question – main unit at Plot No. F/119, unit-II at Plot No. 115 and Unit 3 at Plot B/119, were found to be established at three different premises. The other units /factory separated by open space and common private road, carved out alongwith their relocated main unit (shifted by them) as well as their expanded units (Unit-II and III), which appeared to be not adjacent to the main unit. It was held that assessee was entitled to area based exemption with respect to their main unit/ (unit-I) located at Plot F/119 and so far the other two plots were concerned at Khasra No. 115 (Unit-II) earlier M/s Careplus was functioning and availing area based exemption vide declaration dated 27.12.2006. Thus, assessee unit-II being admittedly the successor of M/s Careplus was also entitled to area based exemption till 27.12.2016. Further, admittedly at the present unit-III of assessee (Plot B/119), earlier M/s Innovate was functioning and availing area based exemption vide declaration dated 27.12.2006, and admittedly assessee unit-III was a successor of the said M/s Innovate and was accordingly eligible for exemption till 27.12.2016 under the exemption scheme. It was also admitted fact that from the public road, there was one common entry /exit for all units /sheds located in the private industrial complex. Thus, there was a virtual corridor / private road existing between the three sheds, admittedly located in one industrial complex and hence for all practical purposes, the three units could be said to be adjacent to each other. Further, it was admitted fact that the two units namely M/s Fantasy and M/s Jyoti Lab had their entry exit gate from the South East common passage, whereas the three units of assessee were using the common passage on the North West side. Thus, there was no practical interference in movement between the three units of assessee and virtual corridor exits. Thus, Unit-II and Unit-III of assessee were held to be eligible for area based exemption. Assessee was entitled for area based exemption with respect to their unit-II located at Khasra No. 115 and unit-III located at Plot B/119.
FULL TEXT OF THE CESTAT JUDGEMENT
The issue in this appeal are-
(i) Whether the appellant correctly availed the ’Area based exemption’ under Notification No. 50/2003-CE with respect to goods manufactured in the factory shed at Khasra No. 115 and Plot No. B of Khasra No. 119?
(ii) Whether in view of Board Circulars dated 22.12.2010, 17.02.2012 and 01.04.2013, manufacturing facilities in Khasra No. 115, Plot No. F of Khasra No. 119 and Plot No. B of Khasra No. 119 can be said to be single factory, eligible for area based exemption under the said notification?
(iii) Whether goods lying in factory on 17.11.2016 were liable to be seized / confiscated?
(iv) Whether penalties under Section 11AC and Rules 26 and 27 of Central Excise Rules are rightly imposed?
2. Brief facts are that the appellant is a partnership firm having their factory at Roorkee falling in the State of Uttarakhand. A private industrial campus was developed by the Partners of the appellant’s firm and their relatives in Khasra Nos. 114, 115, 118 and 119 of Village Raipur, Bhagwanpur, Roorkee, District – Haridwar, Uttarakhand. The said land has been acquired by one of the Partners of the appellant firm alongwith relatives and friends. The industrial complex have been developed by laying in a private road/ lane, construction of boundary wall, construction of different sheds in the campus, so that industrial units could produce goods and avail exemption under the ‘Area based exemption’ Notification No. 50/2003-CE.
3. The Area based exemption under the said notification was available for a period of ten years to the units, which have commenced its commercial production (initially), or had undertaken expansion during 10.06.2003 to 31.03.2010. Such units should be located in the State of Uttarakhand or Himachal Pradesh.
4. All the units located in the different sheds availed ‘Area based exemption’. In the initial declaration, Khasra number had been written in a combined way as it was difficult to identify location of each khasra separately. Each shed is or may be overlapping in more than one khasra – ‘Plot number’. The sketch /diagram of the plot(s) and the complex (as per SCN) is as follows:-
